Posted on 04/16/2010 6:48:50 AM PDT by SeekAndFind
The economy has made a sharp U-turn in the past couple of months, and better days for American businesses and workers are around the corner.
But don't take my word for it. Take Warren Buffett's. And Jamie Dimon's. And Jack Welch's. All three tell me that in the past four to eight weeks, they've seen a real change in their businesses, and that indicates better news for the nation's economy. They should know.
Warren Buffett has been focusing on the data from BNSF Railway, which he recently acquired. At the start of the recession three years ago, Burlington Northern felt the pain early when retailers stopped ordering goods, automakers stopped shipping cars, and homebuilders stopped needing so much lumber. The railroad started storing thousands of idle railcars; now those cars are being called back into service. And that's an incredibly important sign.
But that's not his only hint.
Buffett's Berkshire Hathaway (BRKA, Fortune 500) conglomerate encompasses some 80 different businesses, and he's seeing strength everywhere: from the number of hours customers fly at NetJets to the amount (and cost) of jewelry they buy at Borsheim's.
But the most important place he's seeing it is at Iscar, an Israeli-based manufacturer of metalworking tools he bought in May 2006. Iscar's cutting tools are used on aircraft, auto, and other assembly lines, and the company's sales volume is popping. "You can just feel the pulse of industry quickening," Buffett says.
(Excerpt) Read more at money.cnn.com ...
But his most important indicator may be the anecdotal evidence that a hiring boom is on the horizon. Dimon travels the country constantly for lunches or dinners with business leaders, meeting with groups of 20 to 250 people at a time. They may be people who run small or large businesses, they may be venture capital investors, they may be clients of the firm's massive private banking group.
And then there's Jack Welch, who spent 20 years at the helm of the nation's largest industrial conglomerate, General Electric (GE, Fortune 500). These days Welch is a special partner at private equity firm Clayton Dubilier & Rice, which has investments in everything from Hertz rental cars to TruGreen, a lawn service company.
He told Squawk Box recently that customers across the board are flooding back. "People who have jobs are now feeling more secure about keeping them and are therefore spending," Welch says. "And people who don't have jobs are becoming more hopeful as they see glimmers of hiring."
So if these business leaders are that confident, why are there still so many doubters out there?
I guess it’s OK to buy a car with an unemployment check.
Bull poop...
Higher labor costs as a result of Obiecare ensures that unemployment will not go much lower than it is now. Employers will do more with less and demand OT of the existing workforce rather than bear the burden of adding additional workers.
if true,
why aren’t banks making more small business loans?
or mtge money...
Well if they can get people to believe the economy is better, then it is better.......
But the unemployed know better.
I see so much pessimism regarding America’s economy in FR and I begin to wonder if it’s because a Democrat is sitting in the White House (and we don’t want people to get the impression that any economic improvement will be attributed to him ).
Would we be this pessimistic if a Republican were president ?
Not around here 13.7% UE this morning.
you need to look at the real rate. the u6 which is 17.5% unemployment. plus once the college students graduates lots more unemployed.
What are they supposed to say, that the house of cards that they built and live in is falling down? What I and others see is an empire in decline for various reasons. I see baby boomers leaving the work force and I see the jobs that they once held being eliminated or outsourced on their way out the door. That means there are fewer people paying tax dollars and more people using tax dollars. That can only lead to more and more taxes and more and more socialism which is an unsustainable economic model that ends in third world status. Recent political and economic developments strongly support this view. I see a nation that absolutely positively can not pass a budget without borrowing or printing money. Think about that. We have reached the point where we CAN NOT BALANCE OUR BUDGET. WE ARE BORROWING MONEY TO PAY THE INTEREST ON MONEY THAT WE HAVE BORROWED. What happens in your house when you reach that point? How long can we keep this up and what is the end result? I’d say not for much longer and nothing good. I see $4/gallon gas on the horizon. I see OPEC growing stronger and America growing weaker. I see China growing stronger and America growing weaker. I see Iran growing stronger and America growing weaker. I see our influence in the world diminishing and with it, our ability to control our destiny. I see 14% unemployment in Michigan, 13.4% unemployment in Nevada, 12.6% unemployment in California, 12.3% in Florida, and 11% in my own state of Ohio and those are just the U2 numbers. I see home foreclosures increasing, not decreasing (despite the stock market rally) and with every home foreclosure I see a broken family that will spend a decade or more trying to put their life back together. I see a standard of living that is going down the toilet for too many Americans. In short, I see nothing to be optimistic about. I’m happy that Berkshire Hathaway stock is trading at $130,000/share. I suppose I would be happier if I owned a few shares of Berkshire Hathaway.
Companies have cut to the bone. Many earnings have increased but their sales are way below 2008 earnings records. It means stock prices are going up because the companies are making record profits by cutting workers. The question is will the economy pick up to the point where they can start hiring and how long will the increase cover the basic population increase of workers and ultimately recover the 8.9 M jobs lost. I think we will be stuck like Japan until the corporations and banks can eliminate their balance sheet debts before real expansion begins. I say give the US ten years to reach that balance.
Reno, NV
Yes, people don't realize(at least many of them don't)that the expense of hiring someone goes way beyond the wages paid. Companies have been hiring people for years as part time workers in order to get around some of the overhead required if they work people 40 hours per week. Now the overhead will be even higher and they will have fewer and fewer people on the payroll.
Anyone who actually believes we are on the verge of a recovery have had their brains removed due to brain washing or they simply want to "believe" it.
With long term high unemployment as it is, who is buying the products? With the new mandates on health care and the expiration of the Bush tax cuts, why is business so optimistic about the future? What am I missing? In the near future, the United States will not be able to pay the interest on the National Debt. The government is burning up the printing presses printing money. What am I missing that makes business so optimistic?
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